January 19, 2006

Host: Michael Grant

Credit Card Payments

It's a dose of medicine for consumers that's going to be painful at first. This month, your credit card minimum payments could double. That's because of new rules put in place by federal regulators to help people pay off credit cards, instead of just treading water. Learn more about the new rules.

Michael Grant:
Tonight on Horizon, the Medicare prescription drug plan has been underway since the start of the new year but it has not been a smooth start for some. And your credit card minimum payment could double this month. We'll tell you why. That's next on Horizon.

Announcer:
Horizon is made possible by the friend of Channel 8, members who provide financial support to this Arizona PBS station. Thank you.

Michael Grant:
Good evening and welcome to Horizon. I'm Michael Grant. Before we get to our lead topics tonight here's the latest news. Some bad news for state lawmaker David Burnell Smith who's been fighting to stay in office after clean elections law violations. An appellate court today upheld a lower court ruling that Burnell Smith must vacate his office because he overspent when he ran for office with public funds in 2004. However, the court put its ruling on hold for five days to give him time to file an appeal with the state supreme court. Arizona's economy last year was the best it's been in six years. That according to the Arizona department of economic security, the D.E.S. says the state added nearly 98,000 jobs last year. That is the best annual growth rate since 1999. Last month 18,000 non-farm jobs were created. The state's jobless rate last month was 4.6 percent. The federal government Medicare prescription drug plan, Medicare part D picked off at the start of the New Year. The plan has faced some problems with most of those problems landing on indigent patients. We'll talk to two experts about the problems. But first Mike Sauceda tell the us how the new plan is impacting pharmacists

Mike Sauceda:
Every day pharmacists are at the front line of a battle with problems occurring with a new prescription drug plan.

John Musil:
I know some pharmacists that have spent 16 hours of staff time devoted just to Medicare part D Eligible patients in a day. That's two full-time people in a day just handling all of these new part D Beneficiaries.

Mike Sauceda:
John Musil is owner of 111 apothecary shop pharmacies. As patients signed up for the prescription drug plan last fall there was confusion about. It the plan started Jan 1 and Musil says there have been problems with the startup but it has gotten better since then.

John Musil:
What we experienced at the beginning of the year to where we are today, we are leaps and bounds together.

Mike Sauceda:
Musil says many of the problems are associated with the roll out of any big program. The patients experiencing the worst problems are those eligible for both Medicare and Medicaid, the dual eligible patients.

John Musil:
We've got this part D Benefit. We always had this part B as in boy benefit. The part B Benefit were things like patients who had a transplant or went on immunosuppressive medications. They have always been in the part B Bucket. The federal government was instituting the part D Plan said some of those medications may cross over. But if they are in that part B Bucket before that's where they really should stay. But some of the plans haven't faired it out those medications. Some patients are benefiting through the part D Plan with these part B medications. It's a very convoluted system. By April 1 all health plans are to have separated out part B And part D Medications.

Mike Sauceda:
Another problem. Some patients are finding they are not listed on a plan even though they have signed up. To help ease the problems he says there is something patients can do.

John Musil:
The best thing for all patients to do is to call their pharmacy in advance and say, I know I'm on a part D Benefit. The information that I received from my health plan was, it's plan x. The group number they sent me was this and my id number is whatever the id number is. So that the pharmacy can load that information into the computer. You know, I recommend at least a week before they need their next refill. Because what that's going to do, it's going to get them in the queue faster than to say, okay, I'm coming in. In two hours I'll be there for my medication. And I hope that you have all the information necessary for my part D Plan.

Mike Sauceda:
He says eventually all the problems should be ironed out.

John Musil:
Please be patient with us as pharmacists. We're doing a phenomenal job with the limited resources that we have available to us. Unfortunately, some people's information just has not been inputted into the programs like it should. A lot of people waited really long. There was a lot of confusion as to what part D was. Do I sign up for it? Do I not sign up for it? There was a really short period of time that patients had to sign up from when that benefit began. Patience. Within 30 days we'll have this thing wrapped up. We'll have it so under control it's going to be just like business as usual.

Michael Grant:
Here now to tell us about problems with the Medicare prescription plan is David Mitchell. He is State Director for the A. A. R. P. Also here is Tom Betlach, Deputy Director of the Arizona Health Care Cost Containment System a.k.a. Access. Gentlemen, good to see both of you. David, we'll focus on one of the problems here for just a second. I hadn't really thought about it until the pharmacists' comments there. There is a tremendous amount of communications to be made, hopefully accurately. I guess we'll talk about some that have not been made so accurately. But particular it's one thing for say the large chain prescription operations. But particularly when you think about the number of the pharmacies that are small operations, those kinds of things. A lot of data has to flow.

David Mitchell:
Absolutely. No question. That's where part of the problem really started was in the communication between the federal government and the actual insurance plans and then from the plans to the pharmacists. And not only the communication but particularly the computer problems have been really significant. And that's where we're -- at least beginning to see some improvement. But that's where the problems really began.

Michael Grant:
Tom, the issue, one of the prime issues that we're talking about tonight has to do with Medicaid meeting Medicare. Right?

Tom Betlach:
Right.

Michael Grant:
Why don't you pick it up from there.

Tom Betlach:
Sure. In Arizona we have about 700,000 Arizonans that are eligible for Medicare which is typically associated with senior citizens. We also have about 1 million individuals in state that are eligible for Medicaid, which is lower income individuals. About 97,000 or of the Medicaid are Medicare. They're dual eligibles, both Medicaid and Medicare. Certainly one of the concerns we had as an agency in the executive branch was when these 97,000 individuals were going to be transitioned from Medicaid as the payer to Medicare in this new system, all within one night, January 1. So this brand-new gigantic system is coming up nationally. You've got 6.4 million people that are heavy utilizers. They're very frank. We spend about $400 million on drugs. They account for more than half of that. Yet they're only 10\% of our population.

Michael Grant:
There's a concept here under Medicaid you previously would get prescriptions. Was the concept here that by moving those eligibles, to make them dual eligible on Medicare part D -- it's hard to keep this all straight, that would somehow make it more efficient?

Tom Betlach:
I think that when congress made this decision back in December of 2003, they were weighing different options. And certainly one of them was what to do with the dual population. One of the things that the states have been saying; why don't you have Medicare take over more of these services? So that was the decision that was made with regard to the prescription drugs. I think one of the things that upsets the states all of this is we don't see any benefits from that. You think by having these costs reduced by not providing this benefit anymore that would be a benefit to us. But there's a pay back payment in which we have to turn around and repay the federal government for the payment we made for these customers. The state says we had to open up the governor's state only funds to help bridge the gap and the difficulties out there. A number of other states are spending millions of dollars to help try and back fill during this transitional period before all these systems issues are resolved.

Michael Grant:
David, what has been occurring for at least some of these dual eligibles when they show up to get a prescription?

David Mitchell:
Well, what's happened is some people have come to their pharmacy and said that, I've been getting my prescriptions for a long time under Medicaid. And all of a sudden the pharmacist cannot see a card that they should have because of some of the glitches in the computer system. Their name did not appear on the computer. And so they were saying to these most vulnerable of the population saying, well, you have a $250 deductible with the Medicare part D So you have to pony up for the entire amount of your prescription. So in fact we had people in our office in tears as a result of the fact that their needed medications were not available to them.

Michael Grant:
Because there is a different level, a payment level for the dual eligibles than for the general Medicare 307 population under the new plan.

David Mitchell:
Yes. That is correct. As a matter of fact, not only has the governor and I know we at AARP were delighted to hear that the governor had authorized this laugh a million dollars to help cover these expenses. But also there was an executive order from the president that the pharmacies were to provide at least a 30 days medication for these people while some of these problems were resolved.

Michael Grant:
And Tom, I take it that half million dollars reduced to a microcosmic scale. As this occurred the pharmacist could say, well okay, I will turn to the state temporarily to for example pay the $20 charge for the prescription or whatever the case may be.

Tom Betlach:
Operationally what tends to be happening is the member is calling access saying, I can't get my prescription drugs. We are turning around and working with their Medicaid plan they are assigned to, telling them to work with the pharmacist, cover the drug and make sure they are getting the medications that they need.

Michael Grant:
Do we know what's gone wrong in terms of why is it that this person shows up at a local pharmacy and pharmacy says, geez, I have no record of you?

Tom Betlach:
A lot of it results from systems issues. We talked about this earlier. But it was the fact that the information that was provided by the federal government to the Medicare health plans did not have all the information that was needed. Either the member was not assigned to the plan and the information didn't make it to the plan or else the information did not receive the information that said, this person is eligible for the subsidy. So they show up, they get charged, the prescription drug is going to have a $250 deductible and they're not supposed to have that plus they don't have that money. We're talking about a population that often times lives off of $600 a month.

Michael Grant:
Access would have moved to the federal government the I believe it was in the universe of 97,000 dual eligibles.

Tom Betlach:
That's correct.

Michael Grant:
But then the federal government was supposed to communicate that to the various plans here so they would be recognized.

Tom Betlach:
That's exactly right. We've been talking to CMS on a daily basis and the health plans. They sent out some new information just within the last 24 hours so we're hoping that these are more complete files that the plans will be getting to help iron out and help resolve some of these issues that we are seeing over the last few weeks.

Michael Grant:
I suppose, Tom, that there could have been a breakdown in communication at either one of those levels. In other words, the feds receiving it and or the feds transmitting it back down to the various plans.

Tom Betlach:
Like you said, I think there's a lot of moving pieces. We're not sure because we don't have the access necessarily to all the data that the federal government is sending out to the health plans so we don't know where the breakdown occurred. C.M.S. has been offering some examples where they think the breakdown did occur. States are seeing other things occurring in that data. One of the things that's worth pointing out is, in Arizona we are seeing fewer problems than other states. In California they believe they're having problems with up to 20\% of their dual eligible population. We have had calls from less than 2,000 of our members so less than 2\% of our population. That's at least encouraging. But certainly for those individuals that are unable to get their drugs those issues need to be resolved and they need to be able to get the medications that they need.

Michael Grant:
David, any hunch on how much of this may simply be a timing issue? It was mentioned on the tape that, well, don't expect it to happen in a matter of hours. The process opened on November 15?

David Mitchell:
Yes. People could sign up beginning on the 15th of November. But of course the whole program didn't start until January 1. But the truth of the matter is that there were a lot of people who say signed up on December 31, and in order for that information to get transferred so that they on the 1st of January would be able to receive their medications, a lot of that did not happen. So the good news is that we're seeing at least a reduction in the problems over the last several days. C.M.S. is fully aware of a lot of the problems that are existing and they're continuing to work to solve those problems. But I think it will still take a little more time for it all to settle out.

Michael Grant:
Tom, do we have any indication that there have been any serious health problems as a result of this? I understand all of the other issues.

Tom Betlach:
Sure.

Michael Grant:
Has it been life threatening in any cases?

Tom Betlach:
We have seen a couple instances where people had to be readmitted to the hospital. So we are certainly working on those cases. One of the things that the governor highlighted specifically in the executive order and was discussed in the setup piece was the whole issue of part B drugs dealing with transplants. We've been trying to work through that. The governor authorized that as a specific expenditure. So we are working with all the patients and the health plans to make sure those drugs are being covered just to make sure that that is resolved during this sort of confusion period to make sure we have those prescription drugs covered.

Michael Grant:
Speaking of confusion, David, I think the last time I talked with you about this there was mass confusion in the more general population on how to sign up, what to sign up for, those kinds of things. How has it been since we last chatted in the fall?

David Mitchell:
Well, I think there certainly has been improvement because as people began to sign up on the 15th of November, people were having experience that they were able to share with their neighbors. So I think there's a lot less confusion today than there was six weeks ago.

Michael Grant:
I seem to recall that I thought one of the most valuable tips around was rather than going and examining the plans and trying to make some decisions based thereon, perhaps the best thing for you to do was instead to look at your prescriptions first and then figure out what plan might work.

David Mitchell:
Exactly.

Michael Grant:
Is that a formula?

David Mitchell:
You wanted to make sure that the prescriptions that you're taking are on the formulary of the plan that is being offered. So it was most important to at least look at your medications first and then try to fit the plan that would cover your medications.

Tom Betlach:
The other good advice was to show up early, if possible. To go to your pharmacist a few days in advance, to go ahead and try and make sure that you're not having any difficulties so that those can get resolved before you actually need the medications.

Michael Grant:
Sure. In other words, if you need the prescription on Friday, sort of do a drive around on Tuesday and see if there's any possibility at all that it may be there.

Tom Betlach:
Right.

Michael Grant:
Now, David, if I recall correctly there is a time frame that your signup for the program can continue without penalty.

David Mitchell:
Yes, that's correct. People can sign up until the 15th of May. So there was that 6-month period between November 15 of '05 to May 15 of '06 that people can sign up.

Michael Grant:
All right. David Mitchell, thank you very much for the information. We appreciate. Tom Betlach, good to see you. Consumers who tend to make the minimum monthly payment on their credit card bills may be writing bigger checks these days because federal banking officials are worried that consumers are taking too long to pay off their balances while sinking deeper into debt. So under pressure of federal regulators credit card companies are increasing their minimum credit card payments. Here's a look at the math.

Producer:
Changes in credit card minimum payments are being phased in this year under a directive issued by federal banking regulators including the treasury department office of the comptroller of the issuers are raising the credit card payments consumers must make on their monthly bills. In recent years, minimum monthly credit card payments averaged about 2\% of the outstanding balance. For example, that would be $200 a month on a $10,000 balance. If that credit card carried a 13\% interest rate and the consumer paid the minimum it would take 33 years to pay off the balance with the credit card holder paying nearly $11.5 thousand in interest. If the minimum payment on the same card is raised to 4\% or $400 a month, the 10,000 balance to be paid off in less than 13 years and about $3,700 in interest. That's a difference offer 10-years and nearly $8,000 in interest.

Michael Grant:
Federal banking regulators have been concerned about this issue for quite some time, haven't they?

Jeanine Lipka:
They have. And globally as the graphic showed it is to help consumers repay their debt in a much shorter period of time in addition to repaying the lesser amount in the form of interest.

Michael Grant:
We were joking, but it's a twist on a joke that if you only pay the thing off in 8, 10-years almost all the stuff you will have bought by that is broken or whatever.

Jeanine Lipka:
Absolutely, yes.

Michael Grant:
Is this related to the new changes in the bankruptcy code that went into effect what, a couple, three months ago?

Jeanine Lipka:
Back in October, actually. It is in some respects. Again, the whole purpose of this and the bankruptcy legislation is to help consumers address their financial concerns. While at the same time repaying the debt that they have accumulated. Because that's what we're talking about here. But getting it paid off in a shorter period of time and helping them to be more aware of the financial situation and manage that financial situation.

Michael Grant:
I recognize that the goals and aims are well intentioned and you can certainly do the math a number of times.

Jeanine Lipka:
Absolutely.

Michael Grant:
You cannot argue with the math. Not withstanding that, though, there's a lot of people who factor these things into their budgets and they weren't factoring in 4\%, they were factoring in 2\%.

Jeanine Lipka:
And that can be huge for an individual that is living paycheck to paycheck, for example. For example, an individual that's paying $200 a month on their credit card payments now is obligated to pay $400, or for an individual that is living pay check to paycheck, a $200 increase in that monthly payment can put them over the edge. And that's where the assistance that our company provides comes into play. Our primary concern is to help educate the client on their financial position, open their eyes to what options they I have available to them and then of them recommendations on what their best solution is and the best course of action is to help them attain the financial goals that they want to attain.

Michael Grant:
Is there an average interest rate now on credit card payments? Can you make a general --

Jeanine Lipka:
Somewhere between 17 and 21\% depending upon the credit card company. And depending upon the consumer's financial situation. But somewhere around 17 to 21\%.

Michael Grant:
Beware of those ones that say 0\% interest?

Jeanine Lipka:
Absolutely. Read all the fine print.

Michael Grant:
They always have an as terrace, that says for the first 14.5 minutes.

Jeanine Lipka:
Or if you miss that first payment.

Michael Grant:
Or you default.

Jeanine Lipka:
Yes.

Michael Grant:
What percentage of people are we talking about generally who are minimum payment people?

Jeanine Lipka:
I can only address that question in relation to the consumers that we see.

Michael Grant:
Okay.

Jeanine Lipka:
And I would say close to 99\% of the individuals that come in to seek counseling, financial counseling through our organization are at a point where they're either only paying minimum payments, they're taking cash advances against this credit card to pay this credit card, the well is running dry. And or they don't have sufficient financial where with all during the month to even be able to meet their monthly minimum living expenses, things like mortgage and electricity and food and things of that nature. So the credit cards aren't being paid at all.

Michael Grant:
Let's get back to this person we were talking about who lives paycheck to pay check and wasn't counting on $400 a month, they were counting on $200 a month. Is there any sort of temporary relief for that -- in that consumer? I mean, does it just go to 4 hundred.

Jeanine Lipka:
Certainly the best course of action in an instance like that is for the consumer to contact their creditor and see what kind of hardship programs they may of the consumer to get back on track. That would be my first recommendation. The more communication you can have with the lender the better off you'll be in the long run. Now, that's not to say that the lender will agree to whatever it is you're proposing. But go to the lender with the proposition of what you can afford to pay for what time frame. Most major lenders have a hardship program in place that they offer their clients for generally 3 to 6-month time frame. If you can get on a payment plan of that nature, short-term payment plan of that nature, then you need to start looking at your budget and really understanding where the money is being spent and what your priorities are.

Michael Grant:
All right. Let's say the person says, you know, I just really do not know how to talk to city corp. or whoever it may be. Is that where agencies such as yours, one of the functions that they can help.

Jeanine Lipka:
Absolutely. We kind of act like a middleman, if you will. We're an advocate for the consumer that comes in to see us and we're also an advocate for the credit community. One of the things we tell our clients is that having credit is not a bad thing. Not being able to manage the credit appropriately is where clients get into difficulty. So a big portion of the program that we offer is to educate the consumer on their financial position, help them to understand what it is to live within their means, help them to understand what it is to develop a budget and stick to a budget and understand what their financial spending habits are and then establish financial goals and work toward them.

Michael Grant:
In the broader view of things, ultimately, I mean, this should be good for consumers and for that mat good for the economy.

Jeanine Lipka:
Absolutely. I would agree with that wholeheartedly. We're getting consumer the out of debt in a much quicker time frame and they're not paying the exorbitant interest rates over time that they would be otherwise.

Michael Grant:
And I would think the longer a debt is there the more likely a complete default or certainly a risk of something happening to interrupt the payment?

Jeanine Lipka:
There is certainly that potential, absolutely.

Michael Grant:
All right. Jeanine Lipka from consumer credit counseling services, we appreciate the information and hope everyone can make something larger than the minimum payment.

Jeanine Lipka:
That would be very helpful. My pleasure. Thank you very much.

Michael Grant:
You can get transcripts, information about upcoming shows from our website, wwww.azPBS.org. Once you get there scroll down and click on Horizon.

Producer:
A week after her state-of-the-state speech Governor Napolitano releases her new $10 billion budget and stay lawmaker David Burnell Smith loses another round in court and faces being forced out of office. The Journalists' Roundtable Friday at 7 on Horizon.

Michael Grant:
Those stories and more right here on this journalist round table Tomorrow. Thank you very much for joining us on this Thursday. I'm Michael Grant. Have a great one. Good night.

Announcer:
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Medicare Prescription Drug Plan

David Mitchell, the Arizona State Director of the AARP, and Tom Betlach of the Arizona Health Care Cost Containment System join us to discuss recent problems with the new Medicare Prescription Drug Plan.

Michael Grant:
Tonight on Horizon, the Medicare prescription drug plan has been underway since the start of the new year but it has not been a smooth start for some. And your credit card minimum payment could double this month. We'll tell you why. That's next on Horizon.

Announcer:
Horizon is made possible by the friend of Channel 8, members who provide financial support to this Arizona PBS station. Thank you.

Michael Grant:
Good evening and welcome to Horizon. I'm Michael Grant. Before we get to our lead topics tonight here's the latest news. Some bad news for state lawmaker David Burnell Smith who's been fighting to stay in office after clean elections law violations. An appellate court today upheld a lower court ruling that Burnell Smith must vacate his office because he overspent when he ran for office with public funds in 2004. However, the court put its ruling on hold for five days to give him time to file an appeal with the state supreme court. Arizona's economy last year was the best it's been in six years. That according to the Arizona department of economic security, the D.E.S. says the state added nearly 98,000 jobs last year. That is the best annual growth rate since 1999. Last month 18,000 non-farm jobs were created. The state's jobless rate last month was 4.6 percent. The federal government Medicare prescription drug plan, Medicare part D picked off at the start of the New Year. The plan has faced some problems with most of those problems landing on indigent patients. We'll talk to two experts about the problems. But first Mike Sauceda tell the us how the new plan is impacting pharmacists

Mike Sauceda:
Every day pharmacists are at the front line of a battle with problems occurring with a new prescription drug plan.

John Musil:
I know some pharmacists that have spent 16 hours of staff time devoted just to Medicare part D Eligible patients in a day. That's two full-time people in a day just handling all of these new part D Beneficiaries.

Mike Sauceda:
John Musil is owner of 111 apothecary shop pharmacies. As patients signed up for the prescription drug plan last fall there was confusion about. It the plan started Jan 1 and Musil says there have been problems with the startup but it has gotten better since then.

John Musil:
What we experienced at the beginning of the year to where we are today, we are leaps and bounds together.

Mike Sauceda:
Musil says many of the problems are associated with the roll out of any big program. The patients experiencing the worst problems are those eligible for both Medicare and Medicaid, the dual eligible patients.

John Musil:
We've got this part D Benefit. We always had this part B as in boy benefit. The part B Benefit were things like patients who had a transplant or went on immunosuppressive medications. They have always been in the part B Bucket. The federal government was instituting the part D Plan said some of those medications may cross over. But if they are in that part B Bucket before that's where they really should stay. But some of the plans haven't faired it out those medications. Some patients are benefiting through the part D Plan with these part B medications. It's a very convoluted system. By April 1 all health plans are to have separated out part B And part D Medications.

Mike Sauceda:
Another problem. Some patients are finding they are not listed on a plan even though they have signed up. To help ease the problems he says there is something patients can do.

John Musil:
The best thing for all patients to do is to call their pharmacy in advance and say, I know I'm on a part D Benefit. The information that I received from my health plan was, it's plan x. The group number they sent me was this and my id number is whatever the id number is. So that the pharmacy can load that information into the computer. You know, I recommend at least a week before they need their next refill. Because what that's going to do, it's going to get them in the queue faster than to say, okay, I'm coming in. In two hours I'll be there for my medication. And I hope that you have all the information necessary for my part D Plan.

Mike Sauceda:
He says eventually all the problems should be ironed out.

John Musil:
Please be patient with us as pharmacists. We're doing a phenomenal job with the limited resources that we have available to us. Unfortunately, some people's information just has not been inputted into the programs like it should. A lot of people waited really long. There was a lot of confusion as to what part D was. Do I sign up for it? Do I not sign up for it? There was a really short period of time that patients had to sign up from when that benefit began. Patience. Within 30 days we'll have this thing wrapped up. We'll have it so under control it's going to be just like business as usual.

Michael Grant:
Here now to tell us about problems with the Medicare prescription plan is David Mitchell. He is State Director for the A. A. R. P. Also here is Tom Betlach, Deputy Director of the Arizona Health Care Cost Containment System a.k.a. Access. Gentlemen, good to see both of you. David, we'll focus on one of the problems here for just a second. I hadn't really thought about it until the pharmacists' comments there. There is a tremendous amount of communications to be made, hopefully accurately. I guess we'll talk about some that have not been made so accurately. But particular it's one thing for say the large chain prescription operations. But particularly when you think about the number of the pharmacies that are small operations, those kinds of things. A lot of data has to flow.

David Mitchell:
Absolutely. No question. That's where part of the problem really started was in the communication between the federal government and the actual insurance plans and then from the plans to the pharmacists. And not only the communication but particularly the computer problems have been really significant. And that's where we're -- at least beginning to see some improvement. But that's where the problems really began.

Michael Grant:
Tom, the issue, one of the prime issues that we're talking about tonight has to do with Medicaid meeting Medicare. Right?

Tom Betlach:
Right.

Michael Grant:
Why don't you pick it up from there.

Tom Betlach:
Sure. In Arizona we have about 700,000 Arizonans that are eligible for Medicare which is typically associated with senior citizens. We also have about 1 million individuals in state that are eligible for Medicaid, which is lower income individuals. About 97,000 or of the Medicaid are Medicare. They're dual eligibles, both Medicaid and Medicare. Certainly one of the concerns we had as an agency in the executive branch was when these 97,000 individuals were going to be transitioned from Medicaid as the payer to Medicare in this new system, all within one night, January 1. So this brand-new gigantic system is coming up nationally. You've got 6.4 million people that are heavy utilizers. They're very frank. We spend about $400 million on drugs. They account for more than half of that. Yet they're only 10\% of our population.

Michael Grant:
There's a concept here under Medicaid you previously would get prescriptions. Was the concept here that by moving those eligibles, to make them dual eligible on Medicare part D -- it's hard to keep this all straight, that would somehow make it more efficient?

Tom Betlach:
I think that when congress made this decision back in December of 2003, they were weighing different options. And certainly one of them was what to do with the dual population. One of the things that the states have been saying; why don't you have Medicare take over more of these services? So that was the decision that was made with regard to the prescription drugs. I think one of the things that upsets the states all of this is we don't see any benefits from that. You think by having these costs reduced by not providing this benefit anymore that would be a benefit to us. But there's a pay back payment in which we have to turn around and repay the federal government for the payment we made for these customers. The state says we had to open up the governor's state only funds to help bridge the gap and the difficulties out there. A number of other states are spending millions of dollars to help try and back fill during this transitional period before all these systems issues are resolved.

Michael Grant:
David, what has been occurring for at least some of these dual eligibles when they show up to get a prescription?

David Mitchell:
Well, what's happened is some people have come to their pharmacy and said that, I've been getting my prescriptions for a long time under Medicaid. And all of a sudden the pharmacist cannot see a card that they should have because of some of the glitches in the computer system. Their name did not appear on the computer. And so they were saying to these most vulnerable of the population saying, well, you have a $250 deductible with the Medicare part D So you have to pony up for the entire amount of your prescription. So in fact we had people in our office in tears as a result of the fact that their needed medications were not available to them.

Michael Grant:
Because there is a different level, a payment level for the dual eligibles than for the general Medicare 307 population under the new plan.

David Mitchell:
Yes. That is correct. As a matter of fact, not only has the governor and I know we at AARP were delighted to hear that the governor had authorized this laugh a million dollars to help cover these expenses. But also there was an executive order from the president that the pharmacies were to provide at least a 30 days medication for these people while some of these problems were resolved.

Michael Grant:
And Tom, I take it that half million dollars reduced to a microcosmic scale. As this occurred the pharmacist could say, well okay, I will turn to the state temporarily to for example pay the $20 charge for the prescription or whatever the case may be.

Tom Betlach:
Operationally what tends to be happening is the member is calling access saying, I can't get my prescription drugs. We are turning around and working with their Medicaid plan they are assigned to, telling them to work with the pharmacist, cover the drug and make sure they are getting the medications that they need.

Michael Grant:
Do we know what's gone wrong in terms of why is it that this person shows up at a local pharmacy and pharmacy says, geez, I have no record of you?

Tom Betlach:
A lot of it results from systems issues. We talked about this earlier. But it was the fact that the information that was provided by the federal government to the Medicare health plans did not have all the information that was needed. Either the member was not assigned to the plan and the information didn't make it to the plan or else the information did not receive the information that said, this person is eligible for the subsidy. So they show up, they get charged, the prescription drug is going to have a $250 deductible and they're not supposed to have that plus they don't have that money. We're talking about a population that often times lives off of $600 a month.

Michael Grant:
Access would have moved to the federal government the I believe it was in the universe of 97,000 dual eligibles.

Tom Betlach:
That's correct.

Michael Grant:
But then the federal government was supposed to communicate that to the various plans here so they would be recognized.

Tom Betlach:
That's exactly right. We've been talking to CMS on a daily basis and the health plans. They sent out some new information just within the last 24 hours so we're hoping that these are more complete files that the plans will be getting to help iron out and help resolve some of these issues that we are seeing over the last few weeks.

Michael Grant:
I suppose, Tom, that there could have been a breakdown in communication at either one of those levels. In other words, the feds receiving it and or the feds transmitting it back down to the various plans.

Tom Betlach:
Like you said, I think there's a lot of moving pieces. We're not sure because we don't have the access necessarily to all the data that the federal government is sending out to the health plans so we don't know where the breakdown occurred. C.M.S. has been offering some examples where they think the breakdown did occur. States are seeing other things occurring in that data. One of the things that's worth pointing out is, in Arizona we are seeing fewer problems than other states. In California they believe they're having problems with up to 20\% of their dual eligible population. We have had calls from less than 2,000 of our members so less than 2\% of our population. That's at least encouraging. But certainly for those individuals that are unable to get their drugs those issues need to be resolved and they need to be able to get the medications that they need.

Michael Grant:
David, any hunch on how much of this may simply be a timing issue? It was mentioned on the tape that, well, don't expect it to happen in a matter of hours. The process opened on November 15?

David Mitchell:
Yes. People could sign up beginning on the 15th of November. But of course the whole program didn't start until January 1. But the truth of the matter is that there were a lot of people who say signed up on December 31, and in order for that information to get transferred so that they on the 1st of January would be able to receive their medications, a lot of that did not happen. So the good news is that we're seeing at least a reduction in the problems over the last several days. C.M.S. is fully aware of a lot of the problems that are existing and they're continuing to work to solve those problems. But I think it will still take a little more time for it all to settle out.

Michael Grant:
Tom, do we have any indication that there have been any serious health problems as a result of this? I understand all of the other issues.

Tom Betlach:
Sure.

Michael Grant:
Has it been life threatening in any cases?

Tom Betlach:
We have seen a couple instances where people had to be readmitted to the hospital. So we are certainly working on those cases. One of the things that the governor highlighted specifically in the executive order and was discussed in the setup piece was the whole issue of part B drugs dealing with transplants. We've been trying to work through that. The governor authorized that as a specific expenditure. So we are working with all the patients and the health plans to make sure those drugs are being covered just to make sure that that is resolved during this sort of confusion period to make sure we have those prescription drugs covered.

Michael Grant:
Speaking of confusion, David, I think the last time I talked with you about this there was mass confusion in the more general population on how to sign up, what to sign up for, those kinds of things. How has it been since we last chatted in the fall?

David Mitchell:
Well, I think there certainly has been improvement because as people began to sign up on the 15th of November, people were having experience that they were able to share with their neighbors. So I think there's a lot less confusion today than there was six weeks ago.

Michael Grant:
I seem to recall that I thought one of the most valuable tips around was rather than going and examining the plans and trying to make some decisions based thereon, perhaps the best thing for you to do was instead to look at your prescriptions first and then figure out what plan might work.

David Mitchell:
Exactly.

Michael Grant:
Is that a formula?

David Mitchell:
You wanted to make sure that the prescriptions that you're taking are on the formulary of the plan that is being offered. So it was most important to at least look at your medications first and then try to fit the plan that would cover your medications.

Tom Betlach:
The other good advice was to show up early, if possible. To go to your pharmacist a few days in advance, to go ahead and try and make sure that you're not having any difficulties so that those can get resolved before you actually need the medications.

Michael Grant:
Sure. In other words, if you need the prescription on Friday, sort of do a drive around on Tuesday and see if there's any possibility at all that it may be there.

Tom Betlach:
Right.

Michael Grant:
Now, David, if I recall correctly there is a time frame that your signup for the program can continue without penalty.

David Mitchell:
Yes, that's correct. People can sign up until the 15th of May. So there was that 6-month period between November 15 of '05 to May 15 of '06 that people can sign up.

Michael Grant:
All right. David Mitchell, thank you very much for the information. We appreciate. Tom Betlach, good to see you. Consumers who tend to make the minimum monthly payment on their credit card bills may be writing bigger checks these days because federal banking officials are worried that consumers are taking too long to pay off their balances while sinking deeper into debt. So under pressure of federal regulators credit card companies are increasing their minimum credit card payments. Here's a look at the math.

Producer:
Changes in credit card minimum payments are being phased in this year under a directive issued by federal banking regulators including the treasury department office of the comptroller of the issuers are raising the credit card payments consumers must make on their monthly bills. In recent years, minimum monthly credit card payments averaged about 2\% of the outstanding balance. For example, that would be $200 a month on a $10,000 balance. If that credit card carried a 13\% interest rate and the consumer paid the minimum it would take 33 years to pay off the balance with the credit card holder paying nearly $11.5 thousand in interest. If the minimum payment on the same card is raised to 4\% or $400 a month, the 10,000 balance to be paid off in less than 13 years and about $3,700 in interest. That's a difference offer 10-years and nearly $8,000 in interest.

Michael Grant:
Federal banking regulators have been concerned about this issue for quite some time, haven't they?

Jeanine Lipka:
They have. And globally as the graphic showed it is to help consumers repay their debt in a much shorter period of time in addition to repaying the lesser amount in the form of interest.

Michael Grant:
We were joking, but it's a twist on a joke that if you only pay the thing off in 8, 10-years almost all the stuff you will have bought by that is broken or whatever.

Jeanine Lipka:
Absolutely, yes.

Michael Grant:
Is this related to the new changes in the bankruptcy code that went into effect what, a couple, three months ago?

Jeanine Lipka:
Back in October, actually. It is in some respects. Again, the whole purpose of this and the bankruptcy legislation is to help consumers address their financial concerns. While at the same time repaying the debt that they have accumulated. Because that's what we're talking about here. But getting it paid off in a shorter period of time and helping them to be more aware of the financial situation and manage that financial situation.

Michael Grant:
I recognize that the goals and aims are well intentioned and you can certainly do the math a number of times.

Jeanine Lipka:
Absolutely.

Michael Grant:
You cannot argue with the math. Not withstanding that, though, there's a lot of people who factor these things into their budgets and they weren't factoring in 4\%, they were factoring in 2\%.

Jeanine Lipka:
And that can be huge for an individual that is living paycheck to paycheck, for example. For example, an individual that's paying $200 a month on their credit card payments now is obligated to pay $400, or for an individual that is living pay check to paycheck, a $200 increase in that monthly payment can put them over the edge. And that's where the assistance that our company provides comes into play. Our primary concern is to help educate the client on their financial position, open their eyes to what options they I have available to them and then of them recommendations on what their best solution is and the best course of action is to help them attain the financial goals that they want to attain.

Michael Grant:
Is there an average interest rate now on credit card payments? Can you make a general --

Jeanine Lipka:
Somewhere between 17 and 21\% depending upon the credit card company. And depending upon the consumer's financial situation. But somewhere around 17 to 21\%.

Michael Grant:
Beware of those ones that say 0\% interest?

Jeanine Lipka:
Absolutely. Read all the fine print.

Michael Grant:
They always have an as terrace, that says for the first 14.5 minutes.

Jeanine Lipka:
Or if you miss that first payment.

Michael Grant:
Or you default.

Jeanine Lipka:
Yes.

Michael Grant:
What percentage of people are we talking about generally who are minimum payment people?

Jeanine Lipka:
I can only address that question in relation to the consumers that we see.

Michael Grant:
Okay.

Jeanine Lipka:
And I would say close to 99\% of the individuals that come in to seek counseling, financial counseling through our organization are at a point where they're either only paying minimum payments, they're taking cash advances against this credit card to pay this credit card, the well is running dry. And or they don't have sufficient financial where with all during the month to even be able to meet their monthly minimum living expenses, things like mortgage and electricity and food and things of that nature. So the credit cards aren't being paid at all.

Michael Grant:
Let's get back to this person we were talking about who lives paycheck to pay check and wasn't counting on $400 a month, they were counting on $200 a month. Is there any sort of temporary relief for that -- in that consumer? I mean, does it just go to 4 hundred.

Jeanine Lipka:
Certainly the best course of action in an instance like that is for the consumer to contact their creditor and see what kind of hardship programs they may of the consumer to get back on track. That would be my first recommendation. The more communication you can have with the lender the better off you'll be in the long run. Now, that's not to say that the lender will agree to whatever it is you're proposing. But go to the lender with the proposition of what you can afford to pay for what time frame. Most major lenders have a hardship program in place that they offer their clients for generally 3 to 6-month time frame. If you can get on a payment plan of that nature, short-term payment plan of that nature, then you need to start looking at your budget and really understanding where the money is being spent and what your priorities are.

Michael Grant:
All right. Let's say the person says, you know, I just really do not know how to talk to city corp. or whoever it may be. Is that where agencies such as yours, one of the functions that they can help.

Jeanine Lipka:
Absolutely. We kind of act like a middleman, if you will. We're an advocate for the consumer that comes in to see us and we're also an advocate for the credit community. One of the things we tell our clients is that having credit is not a bad thing. Not being able to manage the credit appropriately is where clients get into difficulty. So a big portion of the program that we offer is to educate the consumer on their financial position, help them to understand what it is to live within their means, help them to understand what it is to develop a budget and stick to a budget and understand what their financial spending habits are and then establish financial goals and work toward them.

Michael Grant:
In the broader view of things, ultimately, I mean, this should be good for consumers and for that mat good for the economy.

Jeanine Lipka:
Absolutely. I would agree with that wholeheartedly. We're getting consumer the out of debt in a much quicker time frame and they're not paying the exorbitant interest rates over time that they would be otherwise.

Michael Grant:
And I would think the longer a debt is there the more likely a complete default or certainly a risk of something happening to interrupt the payment?

Jeanine Lipka:
There is certainly that potential, absolutely.

Michael Grant:
All right. Jeanine Lipka from consumer credit counseling services, we appreciate the information and hope everyone can make something larger than the minimum payment.

Jeanine Lipka:
That would be very helpful. My pleasure. Thank you very much.

Michael Grant:
You can get transcripts, information about upcoming shows from our website, wwww.azPBS.org. Once you get there scroll down and click on Horizon.

Producer:
A week after her state-of-the-state speech Governor Napolitano releases her new $10 billion budget and stay lawmaker David Burnell Smith loses another round in court and faces being forced out of office. The Journalists' Roundtable Friday at 7 on Horizon.

Michael Grant:
Those stories and more right here on this journalist round table Tomorrow. Thank you very much for joining us on this Thursday. I'm Michael Grant. Have a great one. Good night.

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